Governor Andrew Cuomo has moved to limit the factors car insurers may use when determining a driver’s car insurance rate. The new regulation follows a report by the Department of Financial Services (“DFS”), which Gov. Cuomo had tasked with investigating the issue, detailing that some, but not all, of New York auto insurers utilize an applicant’s education and occupation as factors when determining insurance rates.
This often results in individuals with lower educational levels or those working in low-paying occupations having to pay higher rates. According the Cuomo administration, these higher rates are unjustified because there is insufficient evidence that a person’s education or occupation is indicative of his or her driving ability. Lacking sufficient justification, Gov. Cuomo stated that the use of such factors was a violation of Insurance Law provisions which prohibits insurance rates that are “excessive, inadequate, or unfairly discriminatory.”
With New Yorkers already paying some of the highest rates in the nation, Gov. Cuomo said that increasing rates for residents with lower education levels or lower-paying jobs end up harms those with the least ability to pay. Gov. Cuomo said that, “This new protection cracks down on this unfair practice that soaks drivers for not having a college degree or a high-paying job. These metrics are discriminatory, have no relationship to how good of a driver you are and should not be used as an excuse to overcharge New Yorkers.”
The new regulation allows for car insurers to continue charging higher rates if they can prove these factors do not result in unfair rates. To meet this criterion, Gov. Cuomo said that the insurers must provide sufficient evidence that a driver’s education levels and occupational status are “correlated with risk.”
Predictably, the New York Insurance Association has come out against the new regulation, stating that these factors are correlated with higher risk drivers and the new regulation will drive up rates for all New York drivers. Consumer groups, on the other hand, support the proposal. The New York Public Interest Research Group, released a statement praising the new regulation, saying “Auto insurance rates should be based on how you drive, not who you are… With these new regulations, New York is taking an important step to protect many low- and moderate-income New Yorkers from discrimination when purchasing auto insurance.”